By Don MacGillivray
Perhaps the most controversial measure on the November ballot is the increase in the corporate minimum tax on the largest businesses in Oregon.
It will be used to fund public education, the criminal justice system, and shortfalls in human services by supplementing Oregon’s general fund budget with $2.5 billion a year.
Petition 28 was sent to the voters by obtaining 88,000 signatures from Oregonians through the efforts of A Better Oregon, a work group of Our Oregon.
Funding for Oregon schools and other state services have languished for many years in part due to the passage of measure 5 in 1990 that reduced growth of the property taxes in Oregon.
For too long, the largest corporations in Oregon have not paid their fair share of taxes. The state’s share of corporate income taxes has decreased over the last 45 years from 18.5% to 6.7%.
In 1989 corporations benefited from 9 tax breaks, but now there are 51. A recent local poll found that 57% of 400 registered voters believe that big business does not pay their fair share of taxes. Even 37% of Republican voters believe big corporations pay too little.
Oregon schools have lacked the funding needed to meet the basic standards of education in the United States. Far too many young people don’t graduate from high school and face an uncertain future. In spite of these figures, two studies show that Oregon has the lowest effective tax rate in the United States.
Our Oregon is sponsoring Initiative Petition 28, now Measure 97, and is dedicated to the improvement of the economic and social fairness in the state of Oregon. It is a coalition of organizations and individuals who care about appropriately funding schools and critical services while working for equality, justice, and the environment.
Our Oregon has worked to defeat many destructive anti-school and anti-service ballot measures of Bill Sizemore in the 1990s. They worked to pass tax measures 66 and 67 in 2010 to protect funding for Oregon schools in the state budget.
Beginning next year, Measure 97 amends current Oregon law by increasing the annual minimum tax of C Corporations with more that $25 million of sales in Oregon.
Currently corporations with Oregon sales of between $25 million and $50 million pay a minimum tax of $30,000. Under Measure 97, these corporations will pay a minimum tax of $30,001, plus 2.5% of the excess over $25 million.
Opponents charge that this is a hidden sales tax but it is actually a gross receipts tax. Both of these taxes are consumption taxes. Oregon has long been criticized for depending too much on the income tax and the property tax. A gross receipts tax will increase the stability of state revenue.
Under our existing tax structure, the personal income tax makes up 68% of Oregon’s income. Measure 97 will lower this amount to approximately 50%.
Large companies like Wal-Mart, Monsanto, Comcast and many others pay very low corporate taxes, the lowest in the country despite making hundreds of millions of dollars per year.
85% of the Measure 97 tax revenue will be derived from only 274 corporations. Less than 1% of Oregon’s 400,000 businesses will see an increase in their taxes through this measure.
The National Council on State Taxation includes many multi-state and national corporations. They reported in 2010 that Oregon businesses received the best value from their taxes paid during 2009. Oregon tied with two other states for the lowest state and local business taxes.
Accounting experts Ernst & Young state that Oregon’s “total effective tax rate” of property, sales, and income taxes is the second lowest in the United States. Forbes Magazine ranks Oregon as the sixth best state in the nation as a place for business.
Only four states earn a lower share of their taxes from business than Oregon.
Portland Public Schools, expects to refer a construction general obligation bond to the November ballot. It could raise as much as $750 million dollars over the life of the bond. This would be on top of the existing bond measure that was approved in 2012.
The new bond would cost homeowners $1.10 per $1,000 of assessed value or $220 per year on a home assessed at $200,000. The funds will be used to rebuild Benson, Madison, and Lincoln High Schools as well as to repair the lead problems in the schools water systems. The amount of this bond will not be finalized until August.
With a rental vacancy rate of 2% and both apartments and homes increasing in price by ten percent a year Portland’s housing crisis need for more affordable housing is a critical need.
Homelessness is rampant and cannot be reduced without housing low income people can afford. City Council has sent a general obligation bond measure to the voters for $258.5 million to build or renovate 1,300 housing units.
It will be paid back over twenty years and cost the average home owner about $90 a year in increased property taxes. The proposal is backed by the Welcome Home Coalition composed of 140 local caring organizations.
Recent years have been hard on higher education too. Portland State University is asking for an increase in the business payroll tax that will raise about $50 million dollars a year with an increase of 0.1 or 0.2 of one percent.
It is backed by the President of PSU and its board of trustees. They have seen raising costs and lower government support for years. These increases have been borne mostly by higher student tuition and fees.
This money would fund College scholarships for low income students so they can attend college.
The results of these tax measures will illustrate the progressive will of Portland’s voters and will show the great contrast between the political philosophies of Bernie Sanders and Donald Trump.
The needs are great, but the costs are great as well.